Wall St bounces back on hope for ‘cliff’ solution

House Speaker John Boehner was conciliatory even with plans to push ahead a vote on his alternative tax proposal.
Photo: AFP

by
Gabriel Debenedetti

US stocks rebounded from early losses on Thursday after Republican House Speaker John Boehner said he would keep working on a solution to the “fiscal cliff" while also slamming President Barack Obama’s approach to budget talks.

NYSE Euronext was the S&P 500’s biggest gainer, surging 34 per cent to $US32.25 after IntercontinentalExchange said it would buy the operator of the New York Stock Exchange for $US8.2 billion.

ICE shares shot up 1.4 per cent to $US130.10.

Republicans in the US House of Representatives pushed ahead with their own plan to avoid a series of steep tax hikes and spending cuts due in early 2013, complicating negotiations with the White House. Obama has vowed to veto the plan.

Investors have hoped for an agreement soon between policymakers, but progress has been slow. Boehner said he expected to continue to work with Obama, but repeated his charge that the president and Senate Democrats were trying to “slow walk" the country over the fiscal cliff.

“Speaker Boehner went on the air and basically told us he doesn’t like what the president’s doing or not doing, and the markets rallied on that, which was kind of weird," said Stephen Guilfoyle, a trader at Meridian Equity Partners, in New York.

The Dow Jones industrial average gained 59.75 points, or 0.45 per cent, to 13,311.72 at the close. The S&P 500 rose 7.88 points, or 0.55 per cent, to 1443.69. The Nasdaq Composite climbed 6.02 points, or 0.20 per cent, to 3050.39.

Stocks rallied earlier in the week on signs of progress in the fiscal cliff negotiations. But with the S&P 500 up 14.8 per cent so far this year, investors are taking the opportunity to engage in some hedging as 2012 comes to a close.

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Herbalife lost 9.6 per cent to $US33.74 following news that hedge fund manager Bill Ackman was betting against the company as part of his big end-of-the-year short.

The S&P Financial Index gained 1.4 per cent.

The US economy grew 3.1 per cent in the third quarter, faster than previously estimated, while the number of Americans filing new claims for jobless benefits rose more than expected in the latest week.

Existing home sales jumped 5.9 per cent in November, more than expected, and by the fastest monthly pace in three years. An index of housing shares gained 0.78 per cent.

But KB Home slid 6.4 per cent to $US15.60 as the company reported higher homebuilding costs and expenses in the fourth quarter.

About 6.4 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, roughly in line with the daily average so far this year of about 6.46 billion shares.

On the NYSE, advancers outnumbered decliners by a ratio of about 2 to 1. On the Nasdaq, five stocks rose for every three that fell.